1-Diane is a CFO at We Do What We Want, Inc. She was just instructed by her boss, the CEO, to accelerate the recording of revenue into an earlier year to meet financial analysts' earnings projections. In order to meet the ethical standards of the accounting profession, Diane must be certain that she:
Blows the whistle on the financial wrongdoing
Reports the matter to the SEC
Informs the external auditors
Works through the chain of command within the company to avoid subordinating judgment
2-The House Subcommittee on Oversight and Investigations made its recommendations after looking into failures at each of the following companies except:
Enron
Penn Square Bank
Continental Illinois National Bank and Trust
ESM Government Securities
3-In Han, Kang & Lee, LLC, the main accounting issue being discussed with the client is:
Whether to record an expenditure of $2 million as a capital expense and not operating expense
Whether to write-down inventory by 20 percent
Whether to increase the value of inventory by 20 percent
Whether to inform the audit committee of fraud
4-George has been asked by his audit client to provide income tax services including tax planning. Prior to providing such services, George should be certain that:
He first completes the audit
The CEO pre-approves the performance of such services
He assesses threats to independence
The board of directors is informed about such services.